Sir John said the system was only around “halfway” to where it should be in terms of the capital buffers banks are required to have to protect against a financial shock.

He said there had been some “good building” but there was an opportunity to go further and he was “very disappointed” that the Bank of England under Mark Carney appeared to consider that enough had been done.

He told BBC’s Newsnight: “I’m really very disappointed that the Bank of England does take the view that it now takes – very different from the one Mervyn King took when he was governor – (and) think that we have built enough in terms of capital buffers.

“I would say we are roughly, global level, halfway of where we ought to be.

“I believe we would be in huge trouble if a very large, very complicated banking institution got into trouble.”

Sir John, a former Bank of England chief economist, added: “I think we’ve done some good building but there’s an opportunity there to go a lot further, which should be taken. But the current policy stance is, no we don’t need to.”

A decade on from the collapse of Northern Rock, Sir John said there were now tools available to regulators which “shift the odds in a slightly more favourable place”.